Real Estate

How To Wholesale Real Estate And Get Fast Cash

Of all the ways to make money in real estate investments, wholesale is, and honestly, one of my favorites, personally. It’s the strategy we used to avoid financial disaster in 2001, when the events of 9/11 caused the collapse of my aviation business.

Wholesaling is when you gain control of a property and assign your interests to another investor at a marked-up price. And if it sounds like I’ve chosen my words very carefully, you’re right!

Two things you MUST know before proceeding:

1 – It is a well-established principle of contract law that ANY party can assign a contract, unless the contract itself says otherwise. There is a lot of confusion in the market about this; Often the source of the confusion is well-intentioned, but real estate agents and real estate brokers are misinformed. Again, YOU MAY assign any contract (assuming you are a valid party to the contract) unless the contract says otherwise;

2 – Anyone can sell their property without a real estate license. Okay, so what is ownership? Property is anything tangible in which you have an ownership interest, including a fully ratified sales contract.

Ok, so before I get in trouble for practicing law, understand this, what I just said, and I will continue to emphasize, is that it is about BUSINESS Advice, specifically in the area of ​​real estate investment. NOT legal advice. If there is anything I have written that is confusing, or if you are not quite sure, you should talk to YOUR attorney and get their approval before proceeding.

And since everyone has a legal “prepaid” lawyer, or a lawyer available to them, then this will not be a problem. Dudettes folks, if you’re investing in something, or if you live in the US, you need a lawyer. Someone to look over your shoulder. If you refuse to have a team of advisers, including a lawyer, you really need to turn off the computer right now and go back to reruns of Gilligan’s Island because you’re never going to get rich with a DIY (Not Yourself) mentality.

We continue…

So, wholesale is the act of obtaining a property under agreement (contract, letter of intent, memorandum of understanding) and then assigning its interests to another investor. This is the theory, for the actual mechanics of how it works you will invest a bit more time than just reading a blog post. Something to ask now when you attend the next REIA meeting or National Real Estate Investors Conference.

Wholesale is great because it works in ANY market.

When you have low interest rates, as we have seen in the last three years, and most of the “end buyers” are first-time homeowners and rehabbers, you can wholesale them. And when you enter a higher interest rate environment (like now) and “buy/hold” investors start to come back into the market, you can wholesale your deals to this group.

What I like best about Wholesale, though, is that IT GIVES YOU AN EXCUSE! That’s an excuse to meet more experienced investors. As? By accepting wholesale deals with them and in exchange for doing so, you get to know what they know.

Unfortunately, there isn’t enough space here to go into all the details of advanced wholesale strategies, but I’ll come back to this in future posts. What I want to touch on now is the need to stop confusing Wholesale with “Flipping”: they are not the same. Or, more accurately, they don’t mean the same thing in all circles.

The term “Flipping” comes from the world of commercial real estate, where wholesale deals happen ALL THE TIME.

On any given day in Washington, DC, or Baltimore, or any major city in the United States, savvy and savvy investors are putting up small chunks of property (and making millions) with no interest in closing the deals themselves. These street-savvy investors are intent on taking their contracts and assigning them to much deeper-pocketed investment groups that are in the process of “assembling” a city block to build a massive office building.

Larger investors often encourage smaller investors to do this because if the property owner actually knew that XYZ Corp wanted their property, the price would quadruple. A few years ago, the term “flip” crept into the language of people who do single-family businesses. “Flipping” originally meant “flip” the contract.

However, nowadays “Flipping” means many things, including “go to jail”. HEY???

Yes, in 2003, the Federal Government (HUD) issued a ruling broadly calling “Flipping” illegal. This ruling has to do with collusion and other bad things that resulted in several mortgages (which were insured by the Government) going into default. This HUD decision has absolutely NOTHING to do with wholesale, but most people don’t care about the details. They hear the words “illegal” and “flip” in the same sentence and go no further.

In addition to the HUD ruling, HGTV began producing a television show called “…Flipping…”. Again, this show has nothing to do with wholesale. On the HGTV show (which is a knockoff of a British show called Property Ladder), contestants buy, rehab, and then sell houses. If you’ve ever watched this show, you know that it’s probably something you never want to do, unless you want to empty your savings account and end up in divorce court.

Unfortunately, whether it’s a federal decision or a TV show, the term “Flipping” has come to mean different things to different people. So it’s probably best not to even use the term.

Wholesale will make you money. “Flipping” may or may not cause you problems, depending on the type of “Flipping” you are doing.

Again, in a future article (after I discuss the other strategies) we will come back and discuss the various ways to make money selling wholesale. For now, understand this: wholesale sales work in ALL real estate markets, regardless of interest rates or the economy.

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